Online conveyancing business In-Deed is lining up a second law firm acquisition as it shifts its focus away from a direct-to-consumer model, its first annual report has revealed.
The AIM-listed company, whose chairman is Rightmove founder Harry Hill, recorded sales of just £19,000 in the year to 31 March 2012, having launched in May 2011. This reflects “the combination of low customer conversion and the time lag from customer acquisition to exchange of contracts, when revenue is recognised”, Mr Hill wrote.
Though it made a £1.5m loss, the company had net cash at year end of £3.3m and a strong balance sheet.
Mr Hill acknowledged that “it has proved hard to differentiate In-Deed from a miscellany of ‘lookalike’ products promoted on the web, almost always under a misleadingly low price banner”.
This led to a strategic review at the start of 2012 and a decision to enter business-to-business conveyancing market to expand the company’s distribution in the estate agency market. Also, “ownership of a conveyancing firm would enable In-Deed to earn more margin per customer from those that it acquired directly”.
As a result in May it , having received around 50 approaches from firms interested in a discussion. “The vast majority ruled themselves out on grounds of size, profitability or business mix,” said Mr Hill.
Looking to the next year, he said: “A large proportion of our time is being spent on expanding into the B2B market serving national estate agency chains where we have ongoing strategic discussions with several parties which could lead agreements to receive conveyancing work for the longer term in combination with the possible acquisition of a second conveyancing business.
“If these discussions are concluded successfully, we expect to issue further equity to our strategic partners and for this reason we will be seeking authority to increase our ability to issue new shares in respect of acquisitions/strategic partnerships at our forthcoming AGM.”
In a press statement, Mr Hill added: “In the short period since we formed In-Deed in 2010, we have made substantial progress. We have developed and launched a genuinely market-leading conveyancing product direct to consumers whilst at the same time raising capital on AIM. We are the first to admit volumes have been below our expectation but this led to a rapid reappraisal of strategy and the decision to enter the estate agent distributed conveyancing market.
“The acquisition of Runnett has taken place since the year end but we are pleased with what we have bought and excited at its growth potential. Furthermore we are in active discussions with other potential business partners to expand our business and operations and we are hopeful of announcing these soon. I remain convinced we have the opportunity to make In-Deed the market leading conveyancing business in the UK.”
Meanwhile, In-Deed has relaunched the London arm of Runnett & Co as Lewis & Thomas. Senior partner Matthew Lewis said: “Talking to home buyers, there is a real need for high-quality, specialist conveyancing from lawyers who specialise in the London property market. I’m looking forward to partnering with London’s estate agents to deliver a fantastic conveyancing service to our clients.”
Lewis & Thomas have offices in central and west London, with additional offices planned for late 2012. It also offers trusts, estate planning and probate advice.
Harry Hill is speaking at the next Legal Futures conference, ‘The cutting edge of law’, on Monday 19 November. Click here for details.